Confidentiality safeguards for suspended directors preserve resolution-plan access while protecting valid creditor committee proceedings from unsupported challenges.
Suspended directors may attend creditors' committee meetings on a non-voting basis and obtain resolution-plan material, subject to advance written authority for any representative and a confidentiality undertaking. These safeguards protect confidential plan information and do not restrict personal attendance or access once the undertaking is furnished. Non-compliance will not invalidate committee proceedings without demonstrated actual prejudice or a denial of substantive opportunity. Where the process was not materially defective and an approved plan has been implemented, reopening it conflicts with the time-bound, value-preserving insolvency framework. Costs should remain proportionate to the nature of the challenge.
Issues: (i) Whether exclusion of the appellant's representative from the residual proceedings of the 20th CoC meeting for want of written authorisation and a confidentiality undertaking was legally sustainable; (ii) Whether furnishing the resolution plan and connected documents only after receipt of a confidentiality undertaking was consistent with the right of suspended directors to access such material; and (iii) Whether the 20th, 21st and 22nd CoC meetings and the resolution plan approved pursuant to them warranted interference, and what costs were warranted.
Issue (i): Whether exclusion of the appellant's representative from the residual proceedings of the 20th CoC meeting for want of written authorisation and a confidentiality undertaking was legally sustainable.
Analysis: A suspended director has a non-voting right to attend CoC meetings, but participation through an authorised representative requires advance identification and written authority under the applicable framework. The meeting notice gave prior notice of the requirements. Earlier attendance by the representative without formal authority did not waive compliance when confidential resolution plans were to be considered. A confidentiality undertaking was a legitimate safeguard, and the appellant remained free to attend personally or through a duly authorised representative. The absence of such representative did not invalidate the meeting, particularly in the absence of demonstrated prejudice.
Conclusion: The exclusion was legally justified and did not invalidate the 20th CoC meeting. This issue was decided against the appellant.
Issue (ii): Whether furnishing the resolution plan and connected documents only after receipt of a confidentiality undertaking was consistent with the right of suspended directors to access such material.
Analysis: The right of suspended directors to receive resolution plans and relevant material is subject to appropriate confidentiality safeguards. Obtaining a confidentiality undertaking before disclosure was consistent with that safeguard. The material was supplied after the undertaking and before closure of e-voting, affording an opportunity to review it and place views before the CoC; no substantive representation shown to have been prevented or disregarded was established.
Conclusion: Post-undertaking disclosure of the resolution plan and connected documents was lawful and did not contravene the applicable right of access. This issue was decided against the appellant.
Issue (iii): Whether the 20th, 21st and 22nd CoC meetings and the resolution plan approved pursuant to them warranted interference, and what costs were warranted.
Analysis: The record did not establish a denial of substantive opportunity or a procedural defect causing actual prejudice. The challenge to the 20th meeting failed, leaving no independent basis to invalidate the subsequent meetings. The approved resolution plan had also been implemented, and reopening the process would be incompatible with the time-bound, value-preserving insolvency framework. The original costs were nevertheless disproportionate in light of the nature of the challenge.
Conclusion: No interference was warranted with the CoC meetings or the approved resolution plan. The costs were reduced from Rs. 5,00,000 to Rs. 2,00,000.
Final Conclusion: The majority view sustains the validity of the CoC process and leaves the approved and implemented resolution plan undisturbed, while modifying the costs payable by the appellant.
Ratio Decidendi: A suspended director's right to participate in CoC proceedings and access resolution-plan material may validly be conditioned on an authorised representative's advance written authority and confidentiality undertaking; non-compliance, absent demonstrated prejudice, does not invalidate the CoC proceedings.